Pareto on Linkfire – Beating expectations across the line

Linkfire delivered strong report. It is down 90% since its IPO in 2020. Retail sold the stock on concerns about the capital raisings. The Linkfire recapitalisation happened last week. We have reached bottom, I believe. The company is delivering. One of our top ideas for 2023.

Beating expectations across the line
Linkfire reported a strong Q3’22 report today, that came in above expectations on topline, gross profit and EBITDA. Currency tailwinds continue to help the company, where particularly a strong USD played a great effect in the quarter, but even adjusting for the currency tailwinds growth was strong at ~43% y/y on the topline. More importantly though, the cost reductions that are being implemented are showing good effect, resulting in a 62% EBITDA improvement q/q, which we view as very promising. Main takeaways•    Revenue at DKK 14.6m (up 65% y/y), on a constant currency basis revenue was at ~13m (up 43% y/y)•    Gross profit at DKK 11.4m (78% GM) vs PAS at 9.9m (75% GM). On a constant currency basis the gross profit was 10m, which is a 54% y/y improvement•    EBITDA came in at DKK -6.2m vs PAS at -7.2m, driven by mainly staff reductions and other cost savings•    Linkfire will continue to focus on implementing operational cost-reductions, and has also revised its budget process and is increasing its focus on cash flow metrics•    Net cash flow in the quarter was DKK 0.4m, driven by a large goodwill write down, significantly positive WC due to increases in contract liabilities and trade payables and some proceeds from borrowings•    All in all, a strong report from Linkfire, that shows that the company is on the right track to reach full year profitability for FY’23•    Webcast at 10.00 CET, link here Company specific metrics•    Consumer connections up 51% y/y at ~577m, RPM on a constant currency basis down y/y to DKK 6.46 (8.62), as a result of increased partner traffic that is not yet optimized for monetizationtmp67213.png

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